A New Year’s resolution worth keeping: Restoring the balance between states and Washington

• Federal promises are outpacing federal dollars, pushing costs onto states.
• “Guidance” from federal agencies often functions like unfunded mandates.
• Utah lawmakers are considering new transparency tools to expose these hidden costs.

​A good New Year’s resolution for governments would be to renew their focus on the respective roles of state and national governments. Specifically, to return to the constitutional design of limiting federal lawmaking to the specific responsibilities described in that document and allowing the states to address the majority of issues that affect the daily lives of their people.

In November 2025, Utah’s Federalism Commission, a legislative committee responsible for ensuring that respective state and federal responsibilities are respected in all Utah government actions, held hearings on federal burdens on state budgets. The testimony was bracing, at times almost terrifying. Three expert witnesses described how federal funding for social welfare and other programs far outpaces the money available to the national government. Thus, the federal government has begun to, and will likely accelerate the process of, shifting the financial responsibility for these programs to the states.

It is unfortunate that the holidays and other pressing events have kept this event from getting more press attention in Utah. As a recent episode of Sutherland Institute’s “Defending Ideas” podcast explained, state reliance on federal funds for revenue makes them vulnerable when the federal government is overextended or cannot operate (as in the recent shutdown).

After the testimony from experts, the Commission addressed a recent law that requires Utah to make transparent any guidance it receives from federal agencies.

Although this latter discussion was on a different agenda item, there is significant overlap between the two. Federal grants administered by states can become heavy burdens on state budgets when the federal government decides to withdraw from the field. The federal government also imposes burdens on state budgets through agency guidance.

This happens because the states, for various reasons, have a strong incentive to comply with direction from federal agencies even though the direction is nominally not legally binding. Thus, when federal guidance directs states to do something, many of those actions will require state expenditures. Sometimes compliance is relatively simple, as when federal guidance requires states to determine the immigration status of beneficiaries of a federal program. Still, even these simple exactions have costs in terms of staff time and the inevitable shifting of that time from priorities that the states had previously set when they adopted budgets for state agencies.

Sometimes the impact can be severe. A series of “Dear Colleague letters” (memos from federal regulators to state and local school officials describing what the agency believes schools should do to be in compliance with federal law), sent over a decade on race, sex, and gender identity discrimination, provide an illustration.

In these letters, officials at the U.S. Department of Education describe in detail how schools will have to adjust their operations and perhaps even facilities to comply with agency interpretations of the federal laws that prohibit discrimination in education.

A school conscientiously trying to comply will need to change reports, record systems, train faculty and staff, hire new personnel, and be prepared to make significant expenditures of time and money to deal with formal and informal legal challenges from students and parents who are the intended beneficiaries of the guidance. None of these actions will come without high costs. This, of course, is in addition to any constitutional and policy concerns with the direction from the Department.

It is currently difficult to quantify the exact costs of complying with such guidance. Still, in the upcoming legislative session, Utah will consider a law that would allow state agencies to make estimates of these costs transparent. This would be an important advance in creating accountability and helping state officials determine what is at stake when they are deciding how to respond to bureaucratic directives.

One problem with the New Year’s resolution analogy is that such resolutions are notoriously hard to stick with. This resolution, by contrast, really needs sustained effort. The federal government is overextended, and that will have serious consequences over time. If, however, federal profligacy translates to the states, those consequences – measured in terms of failure to provide services to the people of the states and the distortion of state priorities to make room for federal demands – are likely to be even more severe. This is something state governments cannot afford to leave to luck.